The expansion of the Prevent All Cigarette Trafficking (PACT) Act to include electronic nicotine delivery systems (ENDS) transformed the regulatory landscape for vaping products in the United States. What was once a statute focused on cigarettes now applies broadly to vapes, e-liquids, and even components, pulling online sellers, distributors, and manufacturers into a complex compliance framework. Businesses operating in this space must now navigate a combination of federal registration requirements, state tax obligations, and strict shipping rules. The challenge is not simply understanding the law, but operationalizing compliance across multiple jurisdictions with different enforcement priorities.
Who the statute actually reaches
The first step in the compliance map is identifying who is covered. Under federal guidance, any person who sells, transfers, or ships ENDS products in interstate commerce—or even advertises such sales—must comply with the PACT Act. This broad definition means that most participants in the vaping supply chain, including online retailers and wholesalers, are subject to the law. Importantly, the law applies regardless of where the business is located, focusing instead on where products are shipped and sold. ATF Alcohol & Tobacco Q&A
The Domino Effect of Registration
Registration is the foundation of PACT Act compliance, and it is one of the most common areas where businesses fall short. The law requires sellers to register with the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and with the tobacco tax administrators of every state into which they ship products. This creates a multi-jurisdictional obligation that can quickly become burdensome, especially for businesses operating nationwide. Federal guidance emphasizes that registration must occur before engaging in interstate sales, making it a prerequisite rather than a formality. Prevent All Cigarette Trafficking (PACT) Act
Once registered, businesses must comply with ongoing monthly reporting requirements, which are often underestimated in practice. The PACT Act mandates that sellers file reports with each state detailing all shipments made during the prior month, including customer information and product quantities. These reports are intended to give states visibility into interstate sales and ensure proper tax collection. Even businesses with limited sales activity are subject to these requirements, making reporting a continuous compliance obligation rather than a one-time task. (15 U.S.C. § 376)
Tax compliance is another central pillar of the PACT Act framework. Delivery sellers must comply with all applicable state and local excise tax laws, effectively treating each shipment as if it occurred within the destination jurisdiction. This requires businesses to track varying tax rates, product classifications, and filing deadlines across multiple states. Federal authorities have made clear that failure to comply with state tax obligations is a direct violation of the PACT Act, increasing the stakes for businesses that do not maintain accurate tax systems. ATF: Vapes and E-Cigarettes
Shipping Restrictions and Age Verification
Shipping restrictions represent one of the most significant operational changes under the amended law. The PACT Act, as applied to ENDS, generally prohibits the use of the United States Postal Service (USPS) to deliver vaping products to consumers. As a result, businesses must rely on private carriers that are willing to comply with federal requirements, including adult signature verification and proper labeling. Federal postal guidance confirms that most vaping products are considered nonmailable, with only narrow exceptions that rarely apply to commercial distribution. USPS: Electronic Smoking Devices
Age verification requirements further complicate compliance by imposing obligations at both the point of sale and the point of delivery. Sellers must verify the age of customers before completing a transaction, and carriers must confirm that an adult is present to receive the shipment. These dual requirements are designed to prevent underage access to vaping products, but they require coordination between businesses and logistics providers. Failure to implement proper verification procedures remains a frequent enforcement issue. ATF: Vapes and E-Cigarettes
Despite the clarity of the statutory framework, several recurring compliance failures continue to surface. One of the most common mistakes is incomplete registration, particularly in states with evolving vape tax laws or additional licensing requirements. Businesses also frequently struggle with reporting, either failing to file monthly reports or submitting inaccurate data. Tax compliance presents another challenge, as companies often underestimate the complexity of calculating and remitting excise taxes across multiple jurisdictions. Prevent All Cigarette Trafficking (PACT) Act
Shipping practices are another major source of risk. Some businesses attempt to use prohibited mailing methods or rely on carriers that do not fully comply with federal requirements, exposing themselves to enforcement action. Others fail to properly label shipments or ensure that age verification occurs at delivery. Federal authorities have emphasized that these types of violations undermine the purpose of the PACT Act and will be subject to enforcement. ATF: Vapes and E-Cigarettes
The consequences of noncompliance can be severe. The ATF has authority to inspect businesses engaged in delivery sales and enforce both civil and criminal penalties for violations. In addition, noncompliant businesses may face operational disruptions, including the inability to ship products through compliant carriers. These enforcement tools make PACT Act compliance a threshold requirement for participating in the vaping market. Prevent All Cigarette Trafficking (PACT) Act
Ultimately, the PACT Act creates a clear but demanding compliance map built on three core obligations: register in every jurisdiction where products are shipped, report all interstate sales accurately and consistently, and ensure that shipping practices meet federal requirements. Businesses that fail to integrate these obligations into their operations often encounter enforcement issues not because the rules are unclear, but because they are not consistently followed. As federal and state authorities continue to coordinate enforcement efforts, companies that do not take a proactive approach to compliance risk being excluded from the market altogether.
Where the real exposure sits
Enforcement risk under the PACT Act itself is real, and includes civil and criminal penalties along with the practical consequence of losing access to compliant carriers. But in my experience the larger financial exposure for most sellers is not federal. It is the accumulated state excise and sales tax liability, plus penalties and interest, sitting behind reports the seller filed voluntarily and correctly.
Two things follow from that.
First, exposure compounds silently. A seller shipping into thirty states with no excise registrations is not thirty small problems. It is thirty separate assessment files, each with its own lookback period, its own penalty structure, and its own appeal deadline once a notice issues.
Second, the window for fixing it on favorable terms is not open indefinitely. Voluntary disclosure programs generally require that the state has not already contacted you or opened an inquiry. They typically limit the lookback period and abate penalties, which on a multi-year exposure is often the difference between a manageable number and an existential one. A seller whose PACT reports have been sitting in a state's system for three years should not assume that window is still open, and should not wait to find out by receiving a notice.
What to do about it
The diagnostic is straightforward. Pull your PACT Act filing history and list every state you have reported shipments into. Next to each, mark whether you hold a current excise or vapor tax registration and whether you are registered and remitting sales tax. Where a state appears in column one and not in columns two and three, you have quantifiable exposure with a defined start date.
That list is the entire analysis. It tells you which states are urgent, roughly what the liability looks like, and where a voluntary disclosure is still available. It also tells you where you need to move first, because the states that are most active in cross-referencing PACT data are not going to stay quiet.
If a notice has already arrived, the timeline changes and the protest deadline governs everything else. Those deadlines are short and generally not extendable.
Gerald J. Donnini II is a Florida Bar licensed tax attorney representing tobacco and vapor product manufacturers, distributors, and importers in excise tax matters, audits, appeals, and refund claims nationwide. If you are shipping into states where you are not registered, the analysis above takes about a week and determines whether voluntary disclosure is still available to you.
